SunRocket Crashes

SunRocket closed its doors this week. No notice to customers. This was a pre-paid $199 for a year (or two in some cases) of service. No refunds will likely be issued. SunRocket just hit 200,000 subscribers.

It’s Gizmo hardware is not easily compatible with other services according to most notes I have read, so consumers will need to buy a new ATA and port their numbers. (Luckily, the numbers were still with Qwest and Broadwing, according to Om Malik at GigaOm.com.) 8×8, Nuvio, Lingo, ViaTalk and others are offering special deals to attract SunRocket consumers.

The question is why? At $199 per year or $16.58 per month, there isn’t enough profit. You know, PROFIT – the money left over when you pay your bills. But I keep forgetting that in telecom, no one worries about that.

Much of the blame for this mess is being heaped on the CEO, Lisa Hook. She struggled at AOL, but this is telecom, where you get to fail time and time again. And you get to bring your cronies with you, so the same team that failed before can fail together again. It’s ugly. It’s one of the reasons it is hard to get investment money. It’s all arbitrage – short term money grabs. No wonder Earl left.

This industry has such promise. But very few companies are thinking long term or customer-centric. Where is the Purple Cow?

With the crashing of SunRocket and the lawsuits piling up at Vonage (from Verizon, Sprint, shareholders and others), it looks like pure-play residential VoIP will go the same way as competitive residential landlines.

Too many factors are working against it. Consolidation in the RBOC and IXC space has long-distance rates rising. Net neutrality will likely not become law. These factors add up to one thing: duopoly (and probably Sprint being bought by its cable partners).

In addition, this mess will make it even harder for VoIP providers to market their services. Most adoption of technology these days starts at home and moves into the office. So if consumers are getting burned in VoIP, not too many small business owners will want to take the leap. Agents will feel the brunt of this as they attempt to sell VoIP into the workplace. It will need to be a total package move, instead of a replacement service. You will need to integrate IT and TDM with the VoIP offer.

Time to sharpen those consultative sales skills (you can brush up on them at Channel Partners in New Jersey or contact me for some Sales Quarterbacking).

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